U.S. SECURITIES AND EXCHANGE COMMISSION



Washington, D.C. 20549



FORM 10-K



|☑ | Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934     
|- | -----------------------------------------------------------------------------------
|  |                                                                                    
|  | For the fiscal year ended December 31, 2012                                        
|  |                                                                                    
|☐ | Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934.



Commission file number: 333-18439





MOBILE AREA NETWORKS, INC.

(Name of small business issuer in its charter)







|Florida                                  | 59-3482752         
|---------------------------------------- | -------------------
|(State or Other Jurisdiction of          | (I.R.S. Employer   
|Incorporation or Organization)           | Identification No.)
|                                         |                    
|2772 Depot Street, Sanford, Florida      | 32773              
|(Address of Principal Executive Offices) | (Zip Code)         



407-333-2350

(Issuer’s telephone Number)



Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑   No ☐



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge , in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐



Indicate by check mark if the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller Reporting Company ☑



Indicate by check mark whether the registrant is a shell company as defined in Rule 12-b of the Exchange Act. Yes ☐ No ☑



As of December 31, 2012, 49,060,788 shares of the registrant’s voting common stock were outstanding and held by non-affiliates.








PART I



Forward-Looking Statements:



In addition to historical information, this Annual report on Form 10-K may contain statements that could constitute “forward-looking statements” under the federal securities laws. Forward-looking statements often are characterized by terms such as “may”, “believes”, “projects”, “expects”, or “anticipates”, and do not reflect historical facts. Forward-looking statements involve risks, uncertainties, and other factors that may cause the Company’s actual results, performances or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could effect the Company’s results and achievements and cause them to materially differ from those contained in the forward-looking statements include those identified throughout this report and in the section in Item 6, below, as well as other factors that the Company currently is unable to identify or quantify, but that may exist in the future. In addition, the foregoing factors may effect generally the Company’s business, results of operations, and financial position. Forward-looking statements speak only as of the date the statement was made. The Company does not undertake and specifically declines any obligation to update any forward-looking statements included in this report on Form 10-K.



Item 1. Business.



Mobile Area Networks, Inc. (OTCBB: “MANW”) was incorporated in Texas on May 22, 1996 and a Florida corporation of the same name and purpose was formed on November 28, 1997 and became effective on January 1, 1998. The Florida corporation then became the successor in interests to the Texas corporation of the same name. The Texas corporation transferred all right, title, and interests in and to its assets over to the Florida Company. Such transfer was made in exchange for the Company’s issuance of stock to the Texas Company’s shareholders on a five for one share basis. That is, each share of the previously outstanding stock was split up into five shares of the Company’s stock. The Management of the Company had previously decided to operate from and be domiciled in the state of Florida and also decided to streamline its corporate operations, and at the same time created more authorized shares for the corporation to use for funding and or acquisitions. This was accomplished without diluting the ownership of the then current shareholders.



The primary effect of this action was to change the State of Incorporation of the Company.



Mobile Area Networks, Inc. the “Company” began operations in Heathrow, Florida in 1996, and in early 1997 the Company successfully developed, deployed, and documented the first use of any Wireless internet or data service. This service was for users of laptop computers and stationary internet computers “kiosks”, beginning in the Westin Hotel in Waltham (Boston), MA. and other hotels, office buildings, convention centers, and the town of Altamonte Springs Florida. Less secure services with free access became the dominant business model, and although technically successful, this service did not generate sufficient revenues to sustain operations, and the Company’s management pursued other means of generating revenues to sustain the operating Company.



The Company therefore decided to enter a core Industry to create value for its’ shareholders, and on August 12, 2002 the Company entered into an agreement to acquire the operating assets of Vintage Industries, Inc. (“Vintage”) in a stock for assets purchase. The assets consisted of the remnants of an ongoing plastics molding business with computerized plastics mold engineering and manufacturing equipment including computer aided machinery, patents pending, trade secrets for a process to rapidlyproduce plastic injection molds, numerous existing injection molds, plastics injection molding presses, office and support equipment, and the then existing customer base of Vintage.



The Company agreed to issue 1,440,000 of its SEC Rule 144 Restricted Common Shares (having a market value of approximately $274,000 according to the trading price of public shares on the day of the agreement), to be disbursed among the shareholders of and by Vintage Industries, Inc. Vintage was to be dissolved and all future operations in a timely manner were to be consolidated into and owned by Mobile Area Networks, Inc. The Company also agreed to assume responsibility for certain current and long-term liabilities of Vintage.



Simultaneous to the acquisition of the Vintage assets, the Company acquired the complete plastic molding machinery and equipment of Recoton Corporation (at that time a NASDAQ company) in a distress sale which allowed the Company to pay a small amount of cash, plus the agreement to furnish Recoton with certain parts production requirements which it had been molding in-house. The effect of this transaction was to dramatically increase production capacity for the Company. However the short term effect was detrimental to the cash position of the Company and then shortly thereafter Recoton’s business ceased operating. At the time of Recoton’s demise the Company had consolidated operations from four smaller facilities into one much larger manufacturing facility beginning in December, 2002. The Company began the year 2003 as essentially a start-up molding company. In the years when the demand for these plastic services was great Vintage did not have the capacity to increase production and after the consolidation the demand and profitability for these services was eroded by foreign competition.








The business and customer base changed substantially after the Vintage assets acquisition by Mobile Area Networks, Inc. Previously Vintage derived the majority ofits revenues from one business segment which was the sporting firearms industry. Customers included many of the well known firearms makers in the business such as Austin Halleck, Charter Arms, Colt, Henry Repeating Arms, North American Arms, Marlin Firearms, Mossberg, Savage Arms, and Winchester. For several years the sporting arms industry suffered economically but at the year ending 2012 the industry appeared to be improving and some of these companies were customers of the Company.



After enduring continuing losses because of a deteriorated domestic economy, the Company discontinued internal manufacturing operations in May, 2012. The lease on the factory plant was terminated effectively May 26, 2012. Also, on May 25, 2012, an auction was held at which all of the Company’s plant and office equipment was sold. Net proceeds were used to reduce the Company’s long-term debt. The Company is presently engaged in finding a merger partner whose operations can be merged into Mobile Area Networks, Inc. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.



The Company is not aware of any required government approval for any of its services, but should this need arise there is no reason for the Company to believe that it would not be able to obtain such approvals.



The Company has two full time employees including its President and CFO. In addition there are part time consultants available to the Company on an as needed basis.



Item 1A. Risk Factors.



Not applicable for smaller reporting companies.



Item 1B. Unresolved Staff Comments.



None



Item 2. Properties.



On January 1, 2009, the Company executed a new seven year lease with the same owner effective January 1, 2009 through December 31, 2015 with a base rent of $10,500.00 and pro-rated real estate taxes plus sales taxes aggregating $13,181.33 per month..



The lease, as noted above, was terminated effective May 26, 2012.



The Company owns the registered trademark “MOBILAN®”, and claims copyright ownership of other creative and derivative works. On April 28, 1998 Mobile Area Networks, Inc. was granted U.S. Patent #5,745,884 which covers “System And Method For Billing Data Grade Network Use On A Per Connection Basis.” There can be no guarantee of any tangible value for this patent, which was accounted for as a fully amortized intangible asset on the balance sheet of the Company.



Item 3. Legal Proceedings.



None.



The Company has not been a party to any bankruptcy proceedings.



Item 4. Submission of Matters to a Vote of Security Holders.



None.



PART II



Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.



On January 10, 2001, the Company’s stock began publicly trading on the OTCBB system under the symbol “MANW” and currently trades on the OTCQB.



The following table shows the reported high and low sales price at which the Common Stock of the Company was traded in 2012.





|               |  | High |      |  | Low | 
|-------------- |  | ---- | ---- |  | --- | 
|First Quarter  |  |      | .04  |  |     | 
|               |  |      |      |  |     | 
|Second Quarter |  |      | .025 |  |     | 
|               |  |      |      |  |     | 
|Third Quarter  |  |      | .01  |  |     | 
|               |  |      |      |  |     | 
|Fourth Quarter |  |      | .01  |  |     | 

---








The proceeds from the Company’s stock sales to date have been used primarily to fund the continuing capital needs of the Company. The Company continues to explore acquisition opportunities in order to grow the revenue base and build value for the Company.



As of December 31, 2012, the Company had 416 registered shareholders of record.



Item 6. Selected Financial Data.



Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.



Management’s Discussion and Analysis or Plan of Operation should be read in conjunction with the financial statements and related notes which are contained herein in the following pages under Item 7.



Results of Operations



Revenuesdecreased to $40,258 in 2012 from $228,437 in 2011. Internal plant manufacturing was discontinued in May, 2012 which substantially accounts for the decrease.



Cost of Goods Sold decreased to $128,271 in 2012 from $154,021 in 2011. The cessation of plant operations and the write-off of obsolete inventory accounted for the change.



Total Operating Expenses decreased to $250,198 in 2012 from $400,631 in 2011, a decrease of 37.5%.



Bad Debts expense increased to $22,649 in 2012 from $8,500 in 2011. The increase was related to stale-dated accounts where the prospects for recovery were doubtful.



Depreciation expense was $3,094 in 2012, a decrease from $6,188 in 2011. All equipment was sold at an auction held on May 25, 2012.



Interest expense decreased to $17,207 in 2012 from $33,700 in 2011. In 2011 there was a catch-up adjustment to imputed interest on Loans to Shareholders.



Outside Services decreased to $8,170 in 2012 from $15,257 in 2011. The decrease reflects reduced plant operations that were less than one-half of a year.



Administrative Payroll and Payroll Taxes decreased to $120,649 in 2012 from $199,178 in 2011. Overall staffing was less in 2012 due to the discontinuance of plant operations in May, 2012.



Professional Services decreased to $288 in 2012 from $9,550 in 2011. The decrease reflects the decision to not have an annual audit or quarterly review performed by our independent public accountant in 2012.



Other Operating Expenses, which includes such expenses as telephone, health insurance, utilities, travel, office supplies, and local taxes, decreased to $78,141 in 2012 from $128,258 in 2011.. The decrease relates to reduced spending resulting from the termination of plant operations in May, 2012.



Other Income includes a Gain on Disposal of Fixed Assets of $3,300 in 2012 following the May auction of machinery and equipment. There was no like transaction in 2011.



Other Income also includes Debt Forgiven in Exchange for Royalties of $585,898 in 2012. Other than $7,269 which related to writing-off certain stale dated checks that were outstanding, $578,829 related to the forgiveness of a note and accrued rent payable to the building lessor in exchange for waiving future royalty income on a jointly developed new product. There was no like transaction in 2011.



The Net Income for the period was $250,987 in 2012, an increase from the Net Loss for the period of $326,215 in 2011. The increased net income relates to the effects of Other Income in 2012.








The Company’s net operating loss carry-forwards are approximately six million nine hundred thousand dollars ($6,900,000) which are recoverable as income tax savings through the year 2032.



Liquidity and Capital Resources



Working Capital amounted to $(244,161) at December 31, 2012 compared to $(537,419) at December 31, 2011. There was a Bank Overdraft of $28,791 at December 31, 2012 as compared to a Bank Overdraft of $31,574 at December 31, 2011. As more fully presented under the Company’s statements of cash flows in the accompanying financial statements, net cash used in operating activities for the year ended December 31, 2012 and 2011 was $104,126 and $(83,314), respectively. For the years ended December 31, 2012 and December 31, 2011 cash was provided primarily by advances from Shareholders.



The Company’s short term liquidity and capital needs have been satisfied primarily from the continuing sale of the Company’s common stock in private sales, and loans from shareholders. The Company continues to seek the support of underwriters and market makers for the handling of its stock sales.



The Company’s stock registrar is Standard Register & Transfer Company, Inc. which handles all its outside stock share registrations and transfers.



Item 7A. Quantitative and Qualitative Disclosures About Market Risk.



Not applicable for smaller reporting companies.



Item 8. Financial Statements and Supplementary Data.



See Financial Index on page F-1.



Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.



None.



Item 9A. Controls and Procedures



(a) Management’s Annual Report on Internal Control over Financial Reporting



Evaluation of Disclosure Controls and Procedures: As of December 31, 2012, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) promulgated under the Exchange Act Rules.



The Company’s disclosure controls and procedures were ineffective as of December 31, 2008 due to the failure to fileManagements Annual Report on Internal Control over Financial Reporting in our original annual report on Form 10-K/A.



Management’s Annual Report on Internal Control over Financial Reporting:Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Mobile Area Networks, Inc; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and (iii) provide reasonable assurance regarding prevention of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.



Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of December 31, 2012. The determination that our internal control over financial reporting was not effective is due to the Company’s limited resources and lack of ability to have multiple levels of transaction review. Management believes that this “lack of segregation of duties” will be resolved as the Company’s growth provides for the necessary additional staff. Through the use of internal consultants and the review process, management believes that the financial statements and other information presented herewith are materially correct.








The Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that its disclosure controls and procedures, or its internal controls will prevent all error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.



Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2012. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its assessment and those criteria, our management has concluded that we do not maintain effective internal control over financial reporting as of December 31, 2012.



This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this Annual Report.



This report shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing of the Company, whether made before of after the date hereof, regardless of any general incorporation language in such filing.



(b) Changes in Internal Controls



There have been no changes in the Company’s internal control over financial reporting during the period ended December 31, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.”



Item 9B. Other Information.



None.



PART III



Item 10.Directors, Executive Officers and Corporate Governance.



(a)     Directors and Executive Officers:



Beginning January 1, 2013, the following individuals will comprise the Board of Directors and management team. Consistent with Florida corporate law and the Company’s By-Laws, the Company’s Board of Directors may by unanimous vote increase the number of Board members from time to time and or to elect members to fill vacancies, if any.



BOARD OF DIRECTORS



George E. Wimbish, age 68, is a founder of the Company and its concept, and has been a Director of the predecessor Texas Company since November 3, 1996, and Chairman, President and CEO since March 28, 1997. His term of office is yearly until a successor is chosen. His business experience for the past 5 years includes serving as the Company’s Chief Executive Officer. Mr. Wimbish does not serve as a Director in any other public company. He resides in Heathrow, Florida.



Jerald R. Hoeft, CPA,age 70, was appointed Chief Financial Officer in January, 2001 and Director in December, 2010. Mr. Hoeft had been a practicing CPA in the Orlando area from 1999 through 2007. Prior to 1999, he was in the financial services industry for over twenty-five years where he served as a chief financial officer and director for several leading public and privately-held companies. Mr. Hoeft does not serve as a Director in any other public company. He resides in Heathrow, Florida.



Hung V. Ninh, age 54, has a Bachelors of Science Degree from The University of North Carolina in Computer Sciences and Mathematics. Mr. Ninh was also appointed as a Director in December, 2010. He has been in senior management with a major retail chain for over twenty-five years, with over thirty-five years experience in retail management. He does not serve as a director of any other public company. He resides in Lake Mary, Florida.








OFFICERS



Judy D. Wimbish:Corporate Secretary and Executive Assistant to the CEO. Mrs. Wimbish is the wife of the CEO and has served full time with minimal compensation since the beginning of 1998 until the present.



(b)     Significant Employees and Consultants



Paul Savage: Research and Development Director. Mr. Savage has more than 25 years experience in Principal wireless product design in digital, analog, RF, and microwave circuit design. He also possesses extensive field experience in the implementation of wireless on towers and other locations. Mr. Savage currently serves in a consulting role to the Company.



(c)     Family Relationships



Judy D. Wimbish who serves as Executive Assistant, is the wife of CEO and majority shareholder George Wimbish, whose shares are jointly owned by Mrs. Wimbish. She currently serves full time.



Hung Ninh, Director is the son-in-law of the Company’s CEO.



(d)     Certain Legal Proceedings:



The Company is not aware of any legal proceedings within the last five years against any Director, Officer, Significant Employee, or candidate for any such position involving a petition under the Bankruptcy Act or any State insolvency law or of any receiver, fiscal agent or similar officer appointed by a court for the business or property of such person or any partnership in which he was general partner or within two (2) years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two (2) years before the time of such filing; nor is the Company aware of any of the above-mentioned persons being convicted in a criminal proceeding; except as follows: NONE



Item 11. Executive Compensation.



The Company’s current policy is that Directors serve without compensation. However, in the future it may be in the Company’s best interests to compensate Directors in a manner that will attract the most qualified people to serve on the Company’s Board. Through December 31, 2012 the officers of the Company have served mostly without compensation other than the allowance to acquire Restricted founders stock at a preferred price. Mr. Wimbish was paid $-0- in 2012 and in 2011. The Company’s management may determine when it is in the best interest of the Company to compensate Officers and Directors. For the years 1998 through 2012, Mr. Wimbish’s annual salary was approved to be $120,000, a portion of which has not been paid and remains in accrued expenses on the 2012 and 2011 balance sheets. Mr. Wimbish’s deferred salary as wages remains to be the most superior lien upon the Company’s assets.



Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.



The following table sets forth certain information regarding beneficial ownership of the Company’s Common Stock as of December 31, 2012 with respect to each director and officer and any person who is known to the Company to be the beneficial owner of five percent (5%) or more of the Company’s outstanding Common Stock. Also set forth in the table is the beneficial ownership of all shares held by all directors and officers, individually and as a group.



|Name and Address of Owner                                                    |  | Shares Owned |            |  | Percent |      
|---------------------------------------------------------------------------- |  | ------------ | ---------- |  | ------- | -----
|                                                                             |  |              |            |  |         |      
|George E. Wimbish*                                                           |  | 25,500,000   | (a)        |  |         | 51.98
|Director, Chairman, President, & CEO                                         |  |              |            |  |         |      
|P.O. Box 950354                                                              |  |              |            |  |         |      
|Lake Mary, FL 32795                                                          |  |              |            |  |         |      
|Judy D. Wimbish*-Secretary, Jointly owns all shares with George Wimbish, CEO | 
|                                                                             |  |              |            |  |         |      
|Kevin J. Spolski, Investor                                                   |  |              | 4,500,000  |  |         |      
|Company Address                                                              |  |              |            |  |         |      
|                                                                             |  |              |            |  |         |      
|Hung V. Ninh                                                                 |  |              | 17,000     |  |         |      
|Director                                                                     |  |              |            |  |         |      
|Company Address                                                              |  |              |            |  |         |      
|                                                                             |  |              |            |  |         |      
|Jerald R. Hoeft                                                              |  | 670,000      | (d)        |  |         | 1.37 
|Director, Treasurer, Chief Financial Officer                                 |  |              |            |  |         |      
|Company Address                                                              |  |              |            |  |         |      
|                                                                             |  |              |            |  |         |      
|Subtotal                                                                     |  |              | 30,687,000 |  |         |      
|Other Private Shareholders                                                   |  | 16,182,488   | (b)        |  | 32.98   | (c)  
|Publicly traded shares                                                       |  |              | 2,191,300  |  |         |      
|Total                                                                        |  |              | 49,060,788 |  |         |      










|(a) | Within the knowledge of the issuer, no other person holds or shares the power to vote or direct the voting of securities described pursuant to subsection (a) above. No other person holds shares or the power to vote 5% or more of the issuer’s voting securities.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | The Company may utilize private stock shares as incentive or compensation for the product and service marketing efforts of the Company’s employees, when appropriate.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(c) | Some of the restricted shares included in this total have been conditionally assigned to certain employees or consultants with performance and or tenure requirements. The possibility that all of these private shares may or may not be rescinded would not dramatically affect this percentage.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(d) | A portion of these shares were acquired in private transactions between unrelated private shareholders.
|--- | -------------------------------------------------------------------------------------------------------



Item 13. Certain Relationships and Related Transactions, and Director Independence.



All transactions during the previous two years and any presently proposed transaction to which the issuer is a party in which any person having a relationship with the issuer has a direct or indirect material interest are the following transactions, and no others:



None.





Item 14. Principal Accounting Fees and Services.





Audit Fees



The Company incurred audit and review fees from its Independent Registered Public Accounting Firm, Randall N. Drake, CPA, PA the sum of $-0- for the year ending December 31, 2012 and $9,000 for the year ending December 31, 2011.



Audit-Related Fees



None



Tax Fees



None



All Other Fees



None



PART IV



Item 15. Exhibits, Financial Statement Schedules.



Exhibits





|Exhibit 31.1 | CERTIFICATION PURSUANT TO THE SARBANES-OXLEY ACT
|------------ | ------------------------------------------------
|             |                                                 
|Exhibit 31.2 | CERTIFICATION PURSUANT TO THE SARBANES-OXLEY ACT
|             |                                                 
|Exhibit 32   | CERTIFICATION                                   








SIGNATURES



In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



| | MOBILE AREA NETWORKS, INC.
| | --------------------------
| |                           
| | By:                       
| |                           
| |                           





In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in capacities and on the dates indicated.



|Signature          |  | Title                                           |  | Date          
|------------------ |  | ----------------------------------------------- |  | --------------
|                   |  |                                                 |  |               
|                   |  |                                                 |  |               
|/s/ George Wimbish |  | Director, Chairman, President, Chief Executive. |  | April 16, 2013
|George Wimbish     |  |                                                 |  |               
|                   |  |                                                 |  |               
|/s/Jerald R. Hoeft |  | Director, Treasurer, Chief Financial Officer    |  | April 16, 2013
|Jerald R. Hoeft    |  |                                                 |  |               
|                   |  |                                                 |  |               
|/s/ Hung V. Ninh   |  | Director                                        |  | April 16, 2013
|Hung V. Ninh       |  |                                                 |  |               
|                   |  |                                                 |  |               
|                   |  |                                                 |  |               
|                   |  |                                                 |  |               








MOBILE AREA NETWORKS, INC.

(A FLORIDA CORPORATION)

Sanford, Florida







TABLE OF CONTENTS







|Balance Sheets at December 31, 2012 and 2011                                                  | F – 2         
|--------------------------------------------------------------------------------------------- | --------------
|                                                                                              |               
|Statements of Changes in Stockholders' Deficit for the Years Ended December 31, 2012 and 2011 | F – 3         
|                                                                                              |               
|Statements of Operations for the Years Ended December 31, 2012 and 2011                       | F – 4         
|                                                                                              |               
|Statements of Cash Flows for the Years Ended December 31, 2012 and 2011                       | F – 5 – F – 6 
|                                                                                              |               
|Notes to Financial Statements                                                                 | F – 7 – F – 15








MOBILE AREA NETWORKS, INC.

(A FLORIDA CORPORATION)

Sanford, Florida

****

****





BALANCE SHEETS

---



|December 31,                                                                                               |  | 2012 |            |   | 2011 |  
|---------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | -
|                                                                                                           |  |      |            |   |      |  
|ASSETS                                                                                                     |  |      |            |   |      |  
|                                                                                                           |  |      |            |   |      |  
|Current Assets                                                                                             |  |      |            |   |      |  
|Cash and Cash Equivalents                                                                                  |  |      | —          |   |      |  
|Accounts Receivable – Net of Allowance for Doubtful Accounts                                               |  |      | —          |   |      | $
|Inventory                                                                                                  |  |      | —          |   |      |  
|                                                                                                           |  |      |            |   |      |  
|Total Current Assets                                                                                       |  |      | —          |   |      |  
|                                                                                                           |  |      |            |   |      |  
|Property and Equipment – Net of Accumulated Depreciation                                                   |  |      | —          |   |      |  
|                                                                                                           |  |      |            |   |      |  
|Other Assets                                                                                               |  |      |            |   |      |  
|Security Deposits                                                                                          |  |      | —          |   |      |  
|                                                                                                           |  |      |            |   |      |  
|Total Assets                                                                                               |  |      | —          |   |      | $
|                                                                                                           |  |      |            |   |      |  
|LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                      |  |      |            |   |      |  
|                                                                                                           |  |      |            |   |      |  
|Current Liabilities                                                                                        |  |      |            |   |      |  
|Bank Overdraft                                                                                             |  | $    | 28,791     |   |      | $
|Notes and Capital Leases Payable – Due Within One Year                                                     |  |      | 101,101    |   |      |  
|Accounts Payable                                                                                           |  |      | 97,689     |   |      |  
|Accrued Expenses                                                                                           |  |      | 16,580     |   |      |  
|                                                                                                           |  |      |            |   |      |  
|Total Current Liabilities                                                                                  |  |      | 244,161    |   |      |  
|                                                                                                           |  |      |            |   |      |  
|Other Liabilities                                                                                          |  |      |            |   |      |  
|Notes and Capital Leases Payable – Due After One Year                                                      |  |      | —          |   |      |  
|Accrued Salaries – Related Party                                                                           |  |      | 1,548,048  |   |      |  
|Advances from Stockholders                                                                                 |  |      | 360,898    |   |      |  
|                                                                                                           |  |      |            |   |      |  
|Total Liabilities                                                                                          |  |      | 2,153,107  |   |      |  
|                                                                                                           |  |      |            |   |      |  
|Stockholders’ Deficit                                                                                      |  |      |            |   |      |  
|Common Stock: No Par; 50,000,000 Shares Authorized, 49,060,788 Shares Issued And Outstanding, respectively |  |      | 4,656,636  |   |      |  
|Paid-In Capital                                                                                            |  |      | 56,840     |   |      |  
|Accumulated Deficit                                                                                        |  |      | (6,866,583 | ) |      |  
|                                                                                                           |  |      |            |   |      |  
|Total Stockholders’ Deficit                                                                                |  |      | (2,153,107 | ) |      |  
|                                                                                                           |  |      |            |   |      |  
|Total Liabilities and Stockholders’ Deficit                                                                |  | $    | —          |   |      | $



The accompanying notes are an integral part of these financial statements.








MOBILE AREA NETWORKS, INC. (A FLORIDA CORPORATION)

Sanford, Florida











---

|                             |  |                  |            |  |              |   |           |                 |  |   |                     |  |  |                       |           
|---------------------------- |  | ---------------- | ---------- |  | ------------ | - | --------- | --------------- |  | - | ------------------- |  |  | --------------------- | ----------
|                             |  | Number
Of Shares |            |  | Common
Stock |   |           | Paid-In Capital |  |   | Accumulated
Deficit |  |  | Stockholders’
Deficit |           
|                             |  |                  |            |  |              |   |           |                 |  |   |                     |  |  |                       |           
|Balances – December 31, 2010 |  |                  | 49,060,788 |  |              | $ | 4,656,636 |                 |  |   | 56,840              |  |  | $                     | (6,791,355
|                             |  |                  |            |  |              |   |           |                 |  |   |                     |  |  |                       |           
|                             |  |                  |            |  |              |   |           |                 |  |   |                     |  |  |                       |           
|                             |  |                  |            |  |              |   |           |                 |  |   |                     |  |  |                       |           
|Net Loss                     |  |                  | —          |  |              |   | —         |                 |  |   |                     |  |  |                       | (326,215  
|                             |  |                  |            |  |              |   |           |                 |  |   |                     |  |  |                       |           
|Balances – December 31, 2011 |  |                  | 49,060,788 |  |              | $ | 4,656,636 |                 |  | $ | 56,840              |  |  | $                     | (7,117,570
|                             |  |                  |            |  |              |   |           |                 |  |   |                     |  |  |                       |           
|                             |  |                  |            |  |              |   |           |                 |  |   |                     |  |  |                       |           
|                             |  |                  |            |  |              |   |           |                 |  |   |                     |  |  |                       |           
|Net Income                   |  |                  | —          |  |              |   | —         |                 |  |   |                     |  |  |                       | 250,987   
|                             |  |                  |            |  |              |   |           |                 |  |   |                     |  |  |                       |           
|Balances – December 31, 2012 |  |                  | 49,060,788 |  |              | $ | 4,656,636 |                 |  | $ | 56,840              |  |  | $                     | (6,866,583



The accompanying notes are integral parts of these financial statements.








MOBILE AREA NETWORKS, INC.

(A FLORIDA CORPORATION)

Sanford, Florida

****

****





STATEMENTS OF OPERATIONS

---



|Years Ended December 31,                        |  |   | 2012       |   |  |   | 2011       |  
|----------------------------------------------- |  | - | ---------- | - |  | - | ---------- | -
|                                                |  |   |            |   |  |   |            |  
|Revenues – Net of Returns and Allowances        |  | $ | 40,258     |   |  | $ | 228,437    |  
|                                                |  |   |            |   |  |   |            |  
|Cost of Goods Sold                              |  |   | 128,271    |   |  |   | 154,021    |  
|                                                |  |   |            |   |  |   |            |  
|Gross Profit (Loss)                             |  |   | (88,013    | ) |  |   | 74,416     |  
|                                                |  |   |            |   |  |   |            |  
|Operating Expenses                              |  |   |            |   |  |   |            |  
|Bad Debts                                       |  |   | 22,649     |   |  |   | 8,500      |  
|Depreciation                                    |  |   | 3,094      |   |  |   | 6,188      |  
|Interest                                        |  |   | 17,207     |   |  |   | 33,700     |  
|Outside Services                                |  |   | 8,170      |   |  |   | 15,257     |  
|Administrative Payroll and Payroll Taxes        |  |   | 120,649    |   |  |   | 199,178    |  
|Professional Services                           |  |   | 288        |   |  |   | 9,550      |  
|Other Operating Expenses                        |  |   | 78,141     |   |  |   | 128,258    |  
|Total Operating Expenses                        |  |   | 250,198    |   |  |   | 400,631    |  
|                                                |  |   |            |   |  |   |            |  
|Loss Before Other Income                        |  |   | (338,211   | ) |  |   | (326,215   | )
|                                                |  |   |            |   |  |   |            |  
|Other Income                                    |  |   |            |   |  |   |            |  
|Gain on Disposal of Fixed Assets                |  |   | 3,300      |   |  |   | —          |  
|Debt Forgiven in Exchange for Royalties         |  |   | 585,898    |   |  |   | —          |  
|Total Other Income                              |  |   | 589,198    |   |  |   | —          |  
|                                                |  |   |            |   |  |   |            |  
|Net Income (Loss) Before Income Taxes           |  |   | 250,987    |   |  |   | (326,215   | )
|                                                |  |   |            |   |  |   |            |  
|Provision for Taxes                             |  |   | —          |   |  |   | —          |  
|                                                |  |   |            |   |  |   |            |  
|Net Income (Loss)                               |  | $ | 250,987    |   |  | $ | (326,215   | )
|                                                |  |   |            |   |  |   |            |  
|Weighted Average Number of Common Shares        |  |   |            |   |  |   |            |  
|Outstanding – Basic and Diluted                 |  |   | 49,060,788 |   |  |   | 49,060,788 |  
|                                                |  |   |            |   |  |   |            |  
|Net Income (Loss) per Share – Basic and Diluted |  | $ | 0.01       |   |  | $ | (0.01      | )



The accompanying notes are an integral part of these financial statements.








MOBILE AREA NETWORKS, INC.

(A FLORIDA CORPORATION)

Sanford, Florida

****

****





STATEMENT OF CASH FLOWS

---



|Years Ended December 31,                                      |  |   | 2012     |   |  |   | 2011     |  
|------------------------------------------------------------- |  | - | -------- | - |  | - | -------- | -
|                                                              |  |   |          |   |  |   |          |  
|Cash Flows Used By Operating Activities                       |  |   |          |   |  |   |          |  
|                                                              |  |   |          |   |  |   |          |  
|Net Income (Loss)                                             |  | $ | 250,987  |   |  | $ | (326,215 | )
|                                                              |  |   |          |   |  |   |          |  
|Adjustments to Reconcile Net Loss to                          |  |   |          |   |  |   |          |  
|Net Cash Flows Used By Operating Activities:                  |  |   |          |   |  |   |          |  
|Depreciation                                                  |  |   | 3,094    |   |  |   | 6,188    |  
|Changes in Assets and Liabilities:                            |  |   |          |   |  |   |          |  
|Accounts Receivable                                           |  |   | 46,420   |   |  |   | (30,163  | )
|Inventory                                                     |  |   | 63,480   |   |  |   | 4,474    |  
|Other Assets                                                  |  |   | 13,280   |   |  |   | —        |  
|Accounts Payable                                              |  |   | 10,082   |   |  |   | (9,123   | )
|Accrued Expenses                                              |  |   | (403,217 | ) |  |   | 151,525  |  
|Accrued Salaries – Related Party                              |  |   | 120,000  |   |  |   | 120,000  |  
|                                                              |  |   |          |   |  |   |          |  
|Net Cash Flows Provided By (Used In) Operating Activities     |  |   | 104,126  |   |  |   | (83,314  | )
|                                                              |  |   |          |   |  |   |          |  
|Cash Flows Used By Investing Activities                       |  |   |          |   |  |   |          |  
|                                                              |  |   |          |   |  |   |          |  
|Acquisition of Property and Equipment                         |  |   | —        |   |  |   | —        |  
|                                                              |  |   |          |   |  |   |          |  
|Cash Flows Provided By Financing Activities                   |  |   |          |   |  |   |          |  
|Advances (Repayments) from Stockholders                       |  |   | (94,103  | ) |  |   | 56,582   |  
|Proceeds from Issuance of Common Stock                        |  |   | —        |   |  |   | —        |  
|Repayment of Notes and Capital Leases Payable                 |  |   | (7,240   | ) |  |   | 8,745    |  
|                                                              |  |   |          |   |  |   |          |  
|Net Cash Flows Provided By Financing Activities               |  |   | (101,343 | ) |  |   | 65,327   |  
|                                                              |  |   |          |   |  |   |          |  
|                                                              |  |   |          |   |  |   |          |  
|Net Change in Cash and Cash Equivalents                       |  |   | 2,783    |   |  |   | (17,987  | )
|                                                              |  |   |          |   |  |   |          |  
|Cash and Cash Equivalents (Bank Overdraft)– Beginning of Year |  |   | (31,574  | ) |  |   | (13,587  |  
|                                                              |  |   |          |   |  |   |          |  
|Cash and Cash Equivalents (Bank Overdraft) – End of Year      |  | $ | (28,791  | ) |  | $ | (31,574  | )



The accompanying notes are an integral part of these financial statements.








MOBILE AREA NETWORKS, INC.

(A FLORIDA CORPORATION)

Sanford, Florida

****

****





STATEMENTS OF CASH FLOWS – continued

---



|Years Ended December 31, |  |   | 2012   |  |  |   | 2011   | 
|------------------------ |  | - | ------ |  |  | - | ------ | 
|                         |  |   |        |  |  |   |        | 
|Supplemental Disclosures |  |   |        |  |  |   |        | 
|                         |  |   |        |  |  |   |        | 
|Interest Paid            |  | $ | 17,207 |  |  | $ | 33,700 | 
|Income Taxes Paid        |  |   | —      |  |  |   | —      | 



The accompanying notes are an integral part of these financial statements.








MOBILE AREA NETWORKS, INC.

(A FLORIDA CORPORATION)

Sanford, Florida



NOTES TO FINANCIAL STATEMENTS



Note A -Nature of Operations



Mobile Area Networks, Inc. (the “Company”) was incorporated on May 23, 1996 in the State of Texas, and subsequently transferred all of its assets to a Florida Corporation of the same name, which was formed for the purpose of providing all aspects of wireless data communication including LAN-speed data connectivity service to remote home-office network services and to the Internet from frequently traveled routes and places such as hotels and airports.



Operations of the Company up to the date of acquiring the assets of Vintage Industries, Inc. (“Plastics Services”), was devoted primarily to product development and marketing, raising capital, administrative activities and deployment of communications network infrastructure and service demonstration systems for both the MobiLAN® and Learningport.comTM services. Since the date of the Vintage acquisition agreement, the operations of the Company have been devoted primarily to assimilating the assets and operations of these Plastics Services into the Company. The primary business function of the Plastics Services assets is the design, engineering, production of intricate plastic molds, and the production of plastic and rubber parts.



Resources of the Company up to the date of the acquisition of these Plastics Services facilities, were devoted to marketing its wireless internet services. Since the date of the assets acquisition agreement, the resources of the Company have been devoted to assimilating consolidating the assets and operations of Plastics Services into the Company. Both MobiLAN® and Learningport.comTM no longer continue as separate divisions of the Company.



All internal manufacturing operations of the Company were terminated in May, 2012.



Note B -Summary of Significant Accounting Policies



Method of Accounting



The Company maintains its books and prepares its financial statements on the accrual basis of accounting.



Cash and Cash Equivalents



Cash and cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less.



Allowance for Doubtful Accounts and Bad Debts



The Company provides for estimated losses on accounts receivable based on prior bad debt experience and a review of existing receivables. The Accounts Receivable balance as of December 31, 2012 is $-0-. Based on these factors, there is an allowance for doubtful accounts of $-0- as of December 31, 2012 and $25,000 as of December 31, 2011.








MOBILE AREA NETWORKS, INC.

(A FLORIDA CORPORATION)

Sanford, Florida



NOTES TO FINANCIAL STATEMENTS



Note B -Summary of Significant Accounting Policies - continued





Inventory



Inventory consists of raw materials, work-in-process, and finished goods, and is stated at the lower of cost or market using the first-in, first-out method.



Property, Equipment and Depreciation



Property and equipment are stated at cost, less accumulated depreciation computed using the straight line method over the estimated useful lives as follows:



|Manufacturing Equipment         | 5 Years    
|------------------------------- | -----------
|Computer Equipment and Software | 5 Years    
|Office Furniture and Equipment  | 5 - 7 Years
|Leasehold Improvements          | 5 Years    



Maintenance and repairs are charged to expense. The cost of the assets retired or otherwise disposed of and the related accumulated depreciation are removed from the accounts.



Advances from Stockholders



Advances from stockholders consists of advances due on demand for working capital purposes. The amount due has an unstated interest rate and contains no formal repayment terms. Accordingly, the Company has imputed interest at the prime rate plus 1%. Imputed interest expense for the years ended December 31, 2012 and 2011 was $9,053 and $16,372, respectively.



Revenue Recognition



Revenues from product sales are recognized when both the goods are shipped and the customer’s right of return has expired for Plastics Services. Unearned revenue results from deposits received on jobs still in progress.



Use of Estimates



The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results can differ from those estimates.



Concentrations of Credit Risk



Financial instruments, which potentially expose the Company to significant concentrations of credit risk, consist principally of bank deposits, which may at times exceed federally insured limits, and trade accounts receivable. The Company had no cash balances that exceeded insured limits at December 31, 2012 or 2011. Cash is placed primarily in high quality short-term interest bearing financial instruments.








MOBILE AREA NETWORKS, INC.

(A FLORIDA CORPORATION)

Sanford, Florida



NOTES TO FINANCIAL STATEMENTS







Note B -Summary of Significant Accounting Policies - continued



Concentrations of Credit Risk - continued



The Company had two significant customers representing fifty-five percent (55%) of total 2011 sales. As of December 31, 2012, the two significant customers did not have any accounts receivable balance. As of December 31, 2011, two significant customers comprised approximately fourteen percent (14.0%) of the accounts receivable balance.



The Company periodically monitors the credit worthiness of its customers to which it grants credit terms in the ordinary course of business and maintains an allowance for anticipated credit losses.



Fair Value of Financial Instruments



The fair value of cash and cash equivalents, accounts receivables, inventory, security deposits, accounts payable, and accrued expenses approximated book value at December 31, 2012 and 2011, because of the immediate or short-term maturity of these financial instruments.



The fair value of property and equipment, line of credit, notes and capital leases payable, and advances from stockholders could not be obtained without incurring excessive costs as they have no readily determinable market price.



Stock Transactions



Shares of common stock or common stock equivalents issued for services performed are valued at either the fair value of the equity instruments issued or the value of services performed, whichever is the more reliable measure.



During the year ended December 31, 2012, there was not any shares issued in satisfaction of services to the Company.



Net Loss Per Common Share



Basic Earnings Per Share is calculated by dividing loss available to common stockholders by the weighted averagenumber of common shares outstanding for each period. Diluted Earnings per share is the same as Basic Earnings Per Share since no common stock equivalents were outstanding for the years ended December 31, 2012 and 2011.



Reclassifications



Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.








MOBILE AREA NETWORKS, INC.

(A FLORIDA CORPORATION)

Sanford, Florida



NOTES TO FINANCIAL STATEMENTS







Note B -Summary of Significant Accounting Policies - continued



Income Taxes



The Company accounts for income taxes using the asset and liability approach, which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of such assets and liabilities. This method utilizes enacted statutory tax rates in effect for the year in which the temporary differences are expected to reverse and gives immediate effect to changes in income tax rates upon enactment. Deferred tax assets are recognized, net of any valuation allowance, for temporary differences and net operating loss and tax credit carry forwards. Deferred income tax expense represents the change in net deferred tax assets and liability balances. The Company had no material deferred tax assets or liabilities at December 31, 2012 and 2011.



Provision for Income Taxes



Deferred income taxes result from temporary differences between the basis of assets and liabilities recognized for differences between the financial statement and tax basis thereon, and for the expected future tax benefits to be derived from net operating losses and tax credit carry forwards. The Company has approximately six million nine hundred thousand dollars ($6.9 million) in net operating losses as of December 31, 2012, and a valuation allowance equal to the tax benefit of the accumulated net operating losses has been established since it is uncertain that future taxable income will be realized during the applicable carry-forward periods. Accordingly, no income tax provision has been recognized in the accompanying financial statements.







Note C-      Recently Issued Accounting Pronouncements



We have reviewed accounting pronouncements and interpretations thereof issued by the FASB, AICPA and the SEC that have effectiveness dates during the periods reported and in future periods. Management does not believe that any of those pronouncements will have a material impact on the Company’s present or future financial statements.







Note D -Accounts Receivable



Accounts receivable consisted of the following:



---

|December 31,                          |  |   | 2012 |  |  |   | 2011   | 
|------------------------------------- |  | - | ---- |  |  | - | ------ | 
|                                      |  |   |      |  |  |   |        | 
|Trade                                 |  | $ | —    |  |  | $ | 71,420 | 
|Reproductions                         |  |   | —    |  |  |   | —      | 
|                                      |  | $ | —    |  |  | $ | 71,420 | 
|Less: Allowance for Doubtful Accounts |  |   | —    |  |  |   | 25,000 | 
|                                      |  |   |      |  |  |   |        | 
|Net Accounts Receivable               |  | $ | —    |  |  | $ | 46,420 | 





Note E -Inventory



Inventory consisted of the following:



---

|December 31,    |  |   | 2012 |  |  |   | 2011   | 
|--------------- |  | - | ---- |  |  | - | ------ | 
|                |  |   |      |  |  |   |        | 
|Raw Materials   |  | $ | —    |  |  | $ | 63,480 | 
|Work-in-Process |  |   | —    |  |  |   | —      | 
|Finished Goods  |  |   | —    |  |  |   | —      | 
|                |  |   |      |  |  |   |        | 
|Total Inventory |  | $ | —    |  |  | $ | 63,480 | 








MOBILE AREA NETWORKS, INC.

(A FLORIDA CORPORATION)

Sanford, Florida



NOTES TO FINANCIAL STATEMENTS







Note F -Property and Equipment



Property and equipment consisted of the following:





---

|December 31,                    |  | 2012 |   |  | 2011 |  
|------------------------------- |  | ---- | - |  | ---- | -
|                                |  |      |   |  |      |  
|Manufacturing Equipment         |  | $    | — |  |      | $
|Computer Equipment and Software |  |      | — |  |      |  
|Office Furniture and Equipment  |  |      | — |  |      |  
|Leasehold Improvements          |  |      | — |  |      |  
|                                |  | $    | — |  |      | $
|Less: Accumulated Depreciation  |  |      | — |  |      |  
|                                |  |      |   |  |      |  
|Net Property and Equipment      |  | $    | — |  |      | $





Depreciation expense for the years ended December 31, 2012 and 2011 was $3,094 and $6,188, respectively.










MOBILE AREA NETWORKS, INC.

(A FLORIDA CORPORATION)

Sanford, Florida



NOTES TO FINANCIAL STATEMENTS







Note G -Notes and Capital Leases Payable

****

Notes and capital leases payable consisted of the following:



---

|December 31,                           |  |   | 2012    |  |  |   | 2011    | 
|-------------------------------------- |  | - | ------- |  |  | - | ------- | 
|                                       |  |   |         |  |  |   |         | 
|Total Notes and Capital Leases Payable |  | $ | 100,481 |  |  | $ | 108,342 | 
|                                       |  |   |         |  |  |   |         | 
|Less: Amount Due Within One Year       |  |   | 100,481 |  |  |   | 99,596  | 
|                                       |  |   |         |  |  |   |         | 
|Amount Due After One Year              |  | $ | —       |  |  | $ | —       | 





Annual maturities of notes and capital leases payable for the five years succeeding December 31, 2012 are as follows:







---

| | 2012 |         |  | 2013 |   |   | 2014 |  |   | 2015 |  |  | 2016 |   |  | Thereafter |   |   | Total | 
| | ---- | ------- |  | ---- | - | - | ---- |  | - | ---- |  |  | ---- | - |  | ---------- | - | - | ----- | 
| | $    | 100,481 |  |      | $ | — |      |  | $ | —    |  |  | $    | — |  |            | $ | — |       | 





Interest expense on the notes payable and outstanding credit card balances for the years ended December 31, 2012 and 2011 was $17,207 and $33,700, respectively








MOBILE AREA NETWORKS, INC.

(A FLORIDA CORPORATION)

Sanford, Florida



NOTES TO FINANCIAL STATEMENTS



Note H -Leases



The Company entered into a building lease for office and manufacturing space on January 1, 2009 for 25,000 square feet for a term of five years with two options to renew for five years each. The building lease was terminated effective May 26, 2012.



Future minimum lease payments for the five years succeeding December 31, 2012 is as follows:



---

| | 2013 |   |  | 2014 |   |   | 2015 |  |   | 2016 |  |  | 2017 |   |  | Total |  
| | ---- | - |  | ---- | - | - | ---- |  | - | ---- |  |  | ---- | - |  | ----- | -
| | $    | — |  |      | $ | — |      |  | $ | —    |  |  | $    | — |  |       | $





Note I -       Acquisitions



Vintage Industries, Inc.



On August 12, 2002, Mobile Area Networks, Inc. (“the Company”) entered into an asset purchase agreement to acquire all of the operating assets of Vintage Industries, Inc. (“Vintage”) in a stock forassets purchase. The assets acquired consisted of remnants of an on going business with computerized plastics molds engineering and manufacturing equipment including a complete machine tool shop, patents pending for a process that rapidly produces plastic injection molds, numerous plastics injection molds and molding presses, all office and support equipment, and the then existing customer base of the company.



The Company pledged 1,440,000 shares of Restricted Common Stock, with a fair market value of approximately $274,000 according to the trading price of public shares on the day of the agreement, to be disbursed among the then shareholders of and by Vintage Industries, Inc. Vintage was to be dissolved in a timely manner, and future operations were to continue as a business segment of the Company. The Company also agreed to assume responsibility for certain current and long-term liabilities of Vintage. After the issuance of the shares used in this transaction, the effect would be that the former shareholders of Vintage would then own jointly approximately four percent (4%) of the then outstanding shares of the Company. The agreement also includes a Non-Competition Agreement from the former shareholders of Vintage for three years as well as a stock share “leak-out” restriction clause.








MOBILE AREA NETWORKS, INC.

(A FLORIDA CORPORATION)

Sanford, Florida



NOTES TO FINANCIAL STATEMENTS







Note J -Litigation



None.








MOBILE AREA NETWORKS, INC.

(A FLORIDA CORPORATION)

Sanford, Florida



NOTES TO FINANCIAL STATEMENTS







Note K -Related Party Transaction



The Company’s President and Chief Executive Officer has continued to defer a large portion of his salary until such time as the Company’s cash position will allow such payments. Compensation of $120,000 per year has been accrued and accounted for in the accompanying financial statements under the Accrued Salaries - Related Party caption on the Balance Sheet. During 2012 and 2011, the Company’s President was paid $-0-. The balance, $120,000, was accrued as a non-current liability. It is acknowledged by the Company’s management and ratified by its Board of Directors that this deferred salary along with personal notes to the Company by the CEO and his wife are considered wages and is the most superior lien and bond against all of the Company’s assets.





Note L -     Going Concern



The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.



The Company has reported net income of $250,987 and a net loss of $326,215 for the years ended December 31, 2012 and 2011, respectively. As a result, there is an accumulated deficit of $6,866,583 at December 31, 2012. The primary causes of the losses are attributable to operating costs exceeding attained sales due to foreign competition, and challenging economic conditions for manufacturing domestically.



The Company’s continued existence is dependent upon its ability to raise capital and achieving profitable operations. The Company continues to attempt to raise sufficient working capital through equity offerings, and to eliminate debt to lower its monthly debt service requirements. The Company continues to fund operational deficits through equity financing and loans from stockholders. The Company is currently pursuing a merger partner and other sources of capital. These financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.





Note M-     Subsequent Events



Management has evaluated events occurring subsequent to December 31, 2012 and through (FILING DATE), the date the Company filed its annual report on Form 10-K, for their effect on these financial statements.





F-15